Investment properties tax changes eyed

Finance Minister Bill English is continuing to signal changes to the tax regime covering investment properties.

Speaking on a TVNZ 7 programme to be played tonight, Mr English said there was a need for change.

"We will seriously consider changes in the taxation of property," he said.

"We haven't had those put to us yet, but I think the evidence that investment patterns in New Zealand could be more productive I think is pretty strong."

Under current laws, losses on investment properties can be used to write off taxes and capital gains taxes on property are not as tightly applied as in other countries.

Mr English repeated assurances that changes would not include a capital gains tax on homes, but said he had not ruled out anything else.

Those advocating change argue that investment is being funnelled into unproductive parts of the economy, such as investment properties.

Others have argued that other countries with stringent capital gains tax regimes and less generous tax treatment have still experienced property price bubbles like New Zealand.

Currently a tax working group is working on policy options for the Government, which are likely to be released by the end of the year.

This would allow any changes to be made in the 2010 budget, Mr English has said any tinkering with the tax system would be cost-neutral.

This means any taxation gains in one area would be balanced off with reductions elsewhere.

The TVNZ 7 programme was in the news last week due to its advertising heavily featuring Mr English.

The 45-second ad, running on all TVNZ's channels, promoted a new series called Focus on the Economy.

It outraged the Labour Party, which said it was more like a party political broadcast.